Testimony from June 14, 1999

  Opening Statement of U.S. Senator Connie Mack,
Chairman, Joint Economic Committee

Good morning and welcome to the Joint Economic Committee's "National Summit on
High-Technology." This three-day summit will highlight, explore, and advance issues important to this
critical and fast- growing sector of the economy.

We have heard a lot of good news about the U.S. economy recently - unemployment is at a 29-year low,
GDP has been growing at over 4%, and the stock market is at record highs. But the most exciting news
on the economic front has been the incredible advances that are being made in America's high-technology
industries. New medicines, faster computers, and new applications for the Internet seem to be announced
every week.

As Chairman of the Joint Economic Committee, my role is to focus attention on the right policies to
keep the economy energized. Our distinguished panels over the next few days will help us understand
what Washington can do - and what it should avoid doing - to make sure that high-technology continues
to thrive.

The U.S. has the largest and most successful high-technology companies in the world. Our software,
semiconductor and biotechnology companies - to name a few - dominate world markets. In fact, this
country has the highest share of high-tech manufacturing, relative to total manufacturing, of any country.
Look at biotechnology - American biotech companies have revenues five times greater than all the biotech
firms in Europe combined. Or the Internet - the U.S. dominates the Internet with twice as many users as
Europe, and is home to 64% of the world's Internet "host" computers.

Why does the United States lead the rest of the world in so many of these new Knowledge Industries?
The vitality of high-tech in this country reflects our economic freedom. It is also a tribute to the creative
and entrepreneurial genius of thousands of individual businesspeople, scientists, and engineers who took
great risks with uncertain rewards.

We have entered the era of the Innovation Economy -- a system in which we see as never before the
value of the idea ... whether that idea takes the form of a superior technology, superior service or superior
process for bringing products to market. Today, more than ever before in our history, brain power is
being valued as the engine of economic growth.

I see this new economy as a kind of continuum - a logical progression rooted in the freedom that sets our
country apart:
Freedom leads to Knowledge ... Knowledge leads to Innovation ... Innovation leads to Capital Formation
... Capital Formation leads to New Products ... New Products lead to New Jobs.

It's a virtuous cycle which has produced immeasurable blessings for men and women all across the globe.
It has lifted millions out of poverty. It has stretched the limits of human achievement. And it will generate
benefits tomorrow that we cannot begin to comprehend today.That's the way our free market system
works -- it's the mainspring that sets our economy in motion. Michael Rothschild -- one of the most
path-breaking thinkers on the new economy -- asks us to think of the economy as an ecosystem: An
organic entity that must be allowed to function and flourish without outside interference. Think of how far
removed that concept is from the traditional command-and- control paradigm that's shaped so much of
our Government's economic policy in the past.

We are now faced with the challenge of "De-inventing Government" -- to get it out of the way before it
stifles the Innovation Economy that has made America the world's preeminent economic leader.
Because here's the thing about an Innovation Economy: It doesn't just generate wealth -- it generates
progress. What does all that have to do with Washington? It's a reminder that we need to maintain policies
that give the strongest possible support to innovation. We ought to quit playing games, for instance, with
the federal R&D tax credit -- extending it a year at a time, allowing it to expire and then bringing it back to
life again. That's wrong -- because it's counter-productive: No company can plan and invest for the
long-term against a policy that changes every 12 months.

That inefficiency impedes innovation -- and that hurts all of us.

Why is it so crucial that the United States remain dominant -- to be the center of influence in the 21st
century? The first reason is rather obvious: if we're the center of influence, then it's fairly easy to draw
the conclusion that we will be able to enhance the standard of living for our children and grandchildren.
But I think the issue goes deeper than that. A great nation has to set itself on a course to achieve
something greater than itself. We are a nation of people who have thrived because of our beliefs in
freedom, justice, human rights and capitalism. And we are committed to exporting these ideas and
principles around the world. So what we are involved in is vital to the kind of future and legacy we will
leave behind.

We've already begun to live in a new economy.

An economy in which one billion computers move $1 trillion dollars, all with the click of a mouse ...
An economy in which one company generates as much wealth as an entire country ...
An economy in which a key communications system of the future is designed by three kids on a PC in
someone's spare bedroom ...
If that sounds intimidating -- it really shouldn't. After all, listen to the way we speak about this new
economy. The accent is on innovation.
And as a result of our freedom to innovate and create, we are able to out -perform, out-produce,
out-compete and out-create anybody anywhere on the planet.

Our job is to get the big things right: It's up to government to create an environment that allows the private
sector -- that allows each and every person -- to innovate as only he or she can, to exercise the
entrepreneurial spirit that turns innovation into jobs and GDP.
That's the genius of free enterprise.

That's the genius of America. For more than two centuries, it's what's helped make America the envy of
the world. Now, as we approach the new Millennium -- it's what will make the next century a new
American Century as well.